Local Buryat community thanks China Exim Bank for abstaining from harmful hydropower project, but the Government of Mongolia and construction companies still hope to revive it.

In November 2015, the Egiin-Gol Hydropower Plant was named among the five largest projects of the Sino-Mongolian cooperation within the framework of the Silk Road (Belt and road) Initiative and China allocated a $ 1 billion soft loan to support it’s construction. Thus, Mongolia and China actually have refused to implement the decisions of the 39th session of the UNESCO World Heritage Committee that in 2015 prescribed to undertake and submit to the World Heritage Center assessments of individual and cumulative impacts on the Baikal World Heritage Site of all of planned Mongolian hydroelectric power stations on the Eg, Orkhon and Selenge rivers before approving any of these projects.

After the loan approval the RwB Coalition, Greenpeace Russia and other international environmental organizations, scientists and local residents have addressed the Chinese and Mongolian sponsors of the project urging them to comply with international law. Residents of Kabansky district in Republic of Buryatia in February 2016 have organized hearings on Hydro Power Plant (HPP) projects in the catchment area of the Lake Baikal and wrote to the Government of Mongolia, the China Eximbank and a number of Chinese agencies asking them to fulfill obligations under the World Heritage Convention prohibiting damage to world heritage sites in other countries.

This campaign did not yield any reaction from Mongolian Government, but it was noticed by the Chinese authorities. By April 2016, the disbursement of the loan was frozen "until the completion of all necessary assessments," and China Gezhouba Company stopped preparatory construction work started in late 2015.

In March 2017 many Mongolian sources claimed that the loan funds have already been redirected for other purposes. Therefore, at the new hearings in Kabansk on March 23, 2017, the participants decided to express gratitude to the Chinese side for their understanding and wise decisions.

Recently a new letter was sent to Eximbank and the Chinese authorities by the Kabansk Municipality, which in particular says: "Your actions have shown not only the commitment of China to comply with international conventions, but also a deep understanding of the risks for the local population associated with uncoordinated use of the water resources of the transboundary basins … In the light of the continuing non-compliance of the Mongolian side with the requirements of international conventions and treaties, we ask you in future to refrain from financing the creation of hydro power plants in the catchment area of the Lake Baikal ".

In May 2017, the Mongolia Prime Minister participated in "Belt and Road Forum" in Beijing and finalized many Sino-Mongolian cooperation agreements, none of disclosed agreements related to hydropower. Official reports say that on May 10 of Mongolia Cabinet of Ministers decided to use funds from 2015 China EximBank loan for construction of a electricity transmission line from South Gobi to Ulaan Baatar and a bridge in the capital.

Thus, the Egiin Gol Hydro is the first and so far the only precedent known to us when the project, declared within the framework of the Silk Road Economic Belt, was stopped by Chinese investors in connection with appeals from local population about its social and environmental risks. Of course, the status of Lake Baikal as a World Heritage Site has undoubtedly contributed to the decision not to proceed with dam construction.

It is important that major investment projects and schemes of the Silk Road Economic Belt become the subject to early strategic environmental assessments, which allows avoiding incidents similar to those that occurred with the financing of the Egiin Gol hydropower plant.

P.S. Unfortunately the Government of Mongolia still insists that construction of large hydro is the best path to achieving energy independence, while development of Chinese-style energy-coal bases is the quickest way to become energy exporters. The Mongolia Energy Regulatory Commission Chairman A.Tleikhan chaired a Consultative Meeting of Energy sector’ officials held May 16, that confirmed that energy plans are unchanged: "The Government action plan is to build hydropower plants in the Eg River and Khovd River and thermal power plants at Tavantolgoi and in Central region, both projects are now under a bidding process after the completion of their feasibility studies. The successful implementation of these projects will enable Mongolia to supply its energy needs completely from the domestic production. Furthermore, studies are underway to build power plants based on coal mines of Shivee-Ovoo, Tevshiin Gobi and Khashaat tsav, which will give a possibility to export energy."

Eg Hydro Project website, which has been inactive for almost a year since May 2016, sprang up and reported that representative of the "China Gezhouba Group Limited," met with the director on the project unit B.Otgonsükh on April 10, 2017, and exchanged views on how to cooperate further.

On April 12 at a cabinet meeting the Mongolia Government decided to establish state-owned Eg River Hydro Power Plant LLC, which is responsible for ensuring the preparation of a project to build Eg River Hydro Power Plant and for construction and utilization of the plant.

Mongolia Foreign Affairs -minister announced on May 24 that he expects to get $2billion more in aid from China in near future and that the Cabinet of Ministers is yet to decide which purposes this money will serve… However, in our estimate, China is unlikely to openly step back into hydropower construction until all impact assessments are submitted to relevant international agencies and committees.

The RwB Coalition believes that Mongolia Government should revise its 2015 Energy Policy and focus on development abundant renewable energy resources that have less negative impacts on nature and local communities. Necessary maneuvering capacity for the national grid can be provided by pumped storage hydro, other storage technologies or imported from existing facilities in Russia or China. The RwB hopes that 20-year long fruitless and wasteful efforts to develop large hydro in a country with scarce water resources will be discontinued, the sooner – the better.